Financial Performance - Net interest income for Q2 2024 was $388,421,000, an increase from $382,171,000 in Q2 2023, reflecting a growth of 1.3% year-over-year[168] - Noninterest income for Q2 2024 was $87,271,000, compared to $81,629,000 in Q2 2023, representing a growth of 6.5%[168] - Net income available to common shareholders for Q2 2024 was $117,196,000, slightly down from $151,003,000 in Q2 2023, a decrease of 22.4%[168] - Net interest income for the six months ended June 30, 2024, was $744,879, a decrease of 2.9% from $763,659 in 2023[170] - Noninterest income rose to $164,793, an increase of 8.7% compared to $152,310 in the previous year[170] - Net income available to common shareholders decreased to $233,446, down 20.5% from $293,569 in 2023[170] - Net income applicable to common shares for June 30, 2024, was $117,196 thousand, a slight increase from $116,250 thousand in the previous quarter[177] - Adjusted net income per common share, diluted, for June 30, 2024, was $0.46, compared to $0.51 in the previous quarter[177] Loan and Deposit Growth - Total loans increased to $36,150,513,000 in Q2 2024 from $32,432,473,000 in Q2 2023, marking a growth of 11.1%[168] - Total deposits rose to $39,999,228,000 in Q2 2024, compared to $36,231,315,000 in Q2 2023, reflecting a growth of 7.6%[168] - Total loans increased to $36,150,513, up 11.0% from $32,432,473 in 2023[170] - Total deposits increased by $2.3 billion to $40.0 billion at June 30, 2024, including $2.1 billion from the CapStar transaction; excluding this, deposits were up 2.4% annualized[184] - Loan balances increased by $2.5 billion to $36.2 billion at June 30, 2024, including $2.1 billion from the CapStar transaction; excluding this, loans were up 5.9% annualized[185] Credit Losses and Provisions - Provision for credit losses increased to $36,214,000 in Q2 2024 from $14,787,000 in Q2 2023, indicating a significant rise in expected credit losses[168] - Provision for credit losses increased significantly to $55,105, up from $28,224, reflecting a rise of 95.5%[170] - Provision for credit losses was $36.2 million, reflecting net charge-offs and loan growth, compared to $18.9 million in Q1 2024[187] - Total net charge-offs increased by 39.2% to $(14.045) million for the three months ended June 30, 2024, compared to $(10.092) million in the same period in 2023[211] - The allowance for credit losses on loans was $366.3 million at June 30, 2024, an increase from $307.6 million at December 31, 2023, reflecting $23.9 million for acquired PCD loans from the CapStar acquisition[256] Operational Efficiency - The efficiency ratio for June 30, 2024, was 57.17%, compared to 51.66% in the previous quarter, indicating a decline in operational efficiency[177] - The efficiency ratio for Q2 2024 was 57.73%, compared to 52.01% in Q2 2023, indicating increased operational costs[192] - Noninterest expense for the three months ended June 30, 2024, was $282.999 million, a 14.8% increase from $246.584 million in the same period of 2023[215] - Excluding merger-related expenses, noninterest expense increased to $263.6 million for the three months ended June 30, 2024, compared to $240.6 million for the same period in 2023[216] Asset Growth - Total assets reached $53,119,645,000 in Q2 2024, up from $48,496,755,000 in Q2 2023, an increase of 9.3%[168] - Total assets grew to $53,119,645, representing an increase of 9.0% from $48,496,755[170] - Total assets as of June 30, 2024, were $53,119,645 thousand, an increase from $49,534,918 thousand in the previous quarter[177] - Total assets increased to $53.1 billion as of June 30, 2024, up $4.0 billion from $49.1 billion at December 31, 2023, primarily due to the acquisition of CapStar[219] Shareholder Returns - The common dividend payout ratio increased to 38% in Q2 2024 from 27% in Q2 2023, indicating a higher return to shareholders[168] - The common dividend payout ratio increased to 36% from 28% year-over-year[170] Acquisitions and Expansions - The company operates 280 banking centers as of Q2 2024, an increase from 256 in Q2 2023, indicating expansion in physical presence[168] - The acquisition of CapStar on April 1, 2024, added approximately $3.1 billion in total assets, $2.1 billion in total loans, and $2.6 billion in deposits[191] - The company expanded its banking centers to 280, an increase from 256 in the previous year[170] Interest Rate Management - The company’s interest rate management process aims to maximize net interest income while maintaining acceptable limits for interest rate risk[260] - The company’s earnings are sensitive to changes in interest rates, which arise from normal business activities such as gathering deposits and extending loans[261] - The company uses a model to quantify the impact of changing interest rates on projected net interest income over a two-year cumulative horizon[262] - The company may adjust balance sheet mix, change product pricing strategies, or use derivative financial instruments to manage interest rate risk[263] Credit Quality - Total nonaccrual loans increased to $340.2 million, up from $274.8 million, indicating a rise in credit risk[248] - Under-performing assets rose to $353.7 million, representing 0.98% of total loans, a 12 basis point increase from 0.86%[249] - The allowance for credit losses on loans was 107.69% of nonaccrual loans, down from 111.93% at the end of 2023[250] - Total criticized and classified assets increased to $2.2 billion as of June 30, 2024, up by $447.0 million from December 31, 2023, primarily due to higher criticized commercial real estate loans and $73.1 million related to the CapStar acquisition[251] Future Projections - Projected net interest income for June 30, 2024, is $6,920,597 thousand, reflecting a year-over-year increase due to loan growth and rising interest rates[264] - Total interest income is expected to rise from $4,272,879 thousand in 2024 to $6,920,597 thousand in 2026, indicating a growth of approximately 62% over two years[264] - Projected interest expense is anticipated to increase from $1,174,919 thousand in 2024 to $3,698,294 thousand in 2026, representing a growth of about 215%[264] - Net interest income is projected to change from $3,097,960 thousand in 2024 to $3,222,303 thousand in 2026, with a percentage change from base of 4.43%[264]
OLD NATIONAL BAN(ONBPO) - 2024 Q2 - Quarterly Report